GERARDO MÚGICA
Partner México
Alexander Dennis
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View from the Top

NEWCOMER MAKES A GOOD IMPRESSION

Sat, 09/01/2018 - 12:29

Q: What challenges did Alexander Dennis face as a newcomer to the Mexican heavy-vehicle sector?

A: Our project with Line 7 of Metrobús helped us start our operations in Mexico with a bang. The challenge to grow in the market is yet to come but this project has helped us build a strong and visible image from the very beginning. Thanks to this, we are already well-known in the bus sector and we believe it was a good choice to start with import operations. It would have been very risky to bring an assembly line in the hopes this venture would work. However, we now can start thinking about taking the next step and developing a manufacturing presence in Mexico. We still want to develop import projects and especially for small volumes this is our best and most profitable option. We want to close new deals in other parts of the country and eventually grow into new operations as we introduce other products or our clients demand more customization.

We did, however, face a political challenge in our venture with Metrobús. At the point when Mancera was planning to run as a presidential candidate, he could use Line 7 as a success in its administration. However, his opponents could also use that same project to discredit him. Bus projects are commonly used as political tools because they are a good example of things that can be somehow easily done and inaugurated by the administration.

Q: What impact did being a UK company have on Alexander Dennis’ entrance to the Mexican market?

A: We started this project in the middle of the Brexit negotiations, which has created uncertainty for all organizations. However, Alexander Dennis has a diversified global manufacturing footprint and sourcing strategy which allows us to source materials and build vehicles in various locations across Asia Pacific and North America, best suited to individual customer and/ or market requirements. Therefore, our exposure to risk is minimum. Although we are a UK company, we have developed a strong local team in Mexico, supported by our colleagues in UK.

Overall, we had good support from the British Foreign Service Office. Our Ambassador in Mexico, Duncan Taylor, and his team were of great help while we entered the country and we also had the advantage of bringing a quality product that reflected the image and standards of the UK. Double-decker buses are an icon in the UK and it was a coincidental added value that Metrobús chose a red image some years back because it was sort of a nod to the iconic London buses. Our buses are now part of the personality of Reforma Avenue, hopefully for a long time.

Q: How important is Mexico for Alexander Dennis’ global operations?

A: We have operations in various cities in the UK, Hong Kong, Singapore, Malaysia, New Zealand, Europe, the US and Canada. Mexico is our third venture in the Americas and we expect to have many synergies with our partners in North America. Although we are growing our global presence, we still do not have the same footprint as other OEMs, which means that our venture in Mexico is extremely significant for the company. The country is our first contact with Latin America and it could potentially be an opening to service other countries in this market as well.

Q: What conditions should be met for Alexander Dennis to bring manufacturing operations to Mexico?

A: Cities keep growing and we have no doubt that local demand will suggest at some point that we have to explore alternatives. We do not want to participate in this market with a commodity product; we want to offer an added value to the industry and we think there is potential for other competitors to also raise their standards in the products offered in this market. Less than 1 percent of the buses in Mexico City are low-entry units with good technology, while the majority are primitive, high-entry units that discriminate against part of the population.